House prices to crash

[Uncle C]

Sorry Unc just don't see it, people with money to invest got very scared and then thought "I've got money to invest", that money hasn't gone away. People will look to put it somewhere and houses are still a good bet, you spend £200k on a house that you can rent for £850-950, still not a bad return even without the capital asset appreciating.

So thats a 6% return before you deduct agents fees, empty periods, wear and tear, maintenance, safety certificates, bad tenants, rent arrears, insurances etc etc. Then there's capital gains of nearly 30% should it go up and the possibility of a 20% price crash in the next two years.

Equally, if you tied £200K up in a long term investment you would probably get back a similar return, and no aggro. Doesn't sound that impressive to me.

Over the last 20 years it certainly was a good thing to do, as house appreciation during the bubble put the icing on the cake. But as always when the masses start to talk about it at their dinner parties its the time to get out.

 

[Uncle C]

All products, including housing, are impacted by the simple law of economics - supply and demand. The value/cost of said products are thus directly linked to the supply and demand.
In the UK, for the foreseeable future, our population dictates there will always be over-demand for housing - there simply isn't enough to go round.
Sure, the availability of funds from lenders to buy property has some impact on buying but this doesn't take away the demand - these people just go into renting.
So, people who can afford to, become landlords to meet the rental demand from those who want property but cannot afford to buy- they can afford the repayments but can't find the deposit.

Only when demand dries up will prices crash - and that just isn't gonna happen anytime soon.

The supply and demand debate has been held earlier in this thread (difficult to find I know) and proven to be wrong.

In short, Demand = desire to buy x ability to pay.

Because house prices are so expensive, very few have the ability to pay. So, although 'desire to buy' is high, the 'ability to pay factor' keeps demand very low.

And this article appears as I write:

Read more: Mortgage approval rates plummet again in wake of credit crunch | Mail Online

 

[Tim Over Whelmed]

So thats a 6% return before you deduct agents fees, empty periods, wear and tear, maintenance, safety certificates, bad tenants, rent arrears, insurances etc etc. Then there's capital gains of nearly 30% should it go up and the possibility of a 20% price crash in the next two years.

Equally, if you tied £200K up in a long term investment you would probably get back a similar return, and no aggro. Doesn't sound that impressive to me.

Over the last 20 years it certainly was a good thing to do, as house appreciation during the bubble put the icing on the cake. But as always when the masses start to talk about it at their dinner parties its the time to get out.

Or by that time those people are moving out and the smart money is moving in, we'll see.

 

[beorhthelm]

Wow, you have some faith in the Great British Public to be able to organise their finances like that.

yes i do, while you seem to have very little. look at it practically, if someone took out a mortgage in 2006 on a rate of 6.5% and are now on 2.5%, they will a great deal spare cash. im not naive to think they would all be dilligently paying down every pound spare, but they might have done some. that is besides the point, they had a budget to afford that higher rate and have adjusted their spending elsewhere. now they will have to just readjust.

I agree, but a move to just 1% doubles the current rate.

you've said this before. it doesnt double the rate for those on floor rates of 2-3%, or those on trackers and fixed above that. those lucky enough to make hay with no floor rate should have (in probably will have partially) been saving some of that windfall.

Didn't the CML put out something recently indicating that something like 2.3 million households will struggle to pay an additional £100pm on their mortgage (equates approx to a 1% increase on a £120K mortgage).

you'd hope they would know, but wonder where those numbers come from. the numbers i have to hand indicate 1% increas on a 120K mortgage would increase payments about £65. and again why would they struggle when they took out a loan at a higher rate not long ago?

 

[Eastleigh Seagull]

In short, Demand = desire to buy x ability to pay.

Because house prices are so expensive, very few have the ability to pay. So, although 'desire to buy' is high, the 'ability to pay factor' keeps demand very low.

And this article appears as I write:

Read more: Mortgage approval rates plummet again in wake of credit crunch | Mail Online

This article is (unsurprisingly) a hideous piece of journalism that plucks figures from which ever year suits its 'the end of the world is nigh' message, it doesnt even mention the month on month and year on year mortgage approvals that have apparently plummeted. In addition you seem to have missed another factor - people dont always move houses just to go up the food chain - indeed many do it for just the opposite reasons. Old people (or young) downsizing, or moving to a new job, in the environment we all live in now people will need to move houses - so their ability to pay will remain in existence. Yes the market will lose those who were getting the infamous 100+% mortgages but it was these that were creating the bubble. In general houses in the long term are a sound investment as long as people are sensible and dont get greedy.

My experience of having recently moved suggests differently - if you buy a house in a nice area for a sensible price then the house price will continue to rise - ours rose by 35% in the last five years when, according to the Mail and other sensationalist publications, house prices around the country were plummeting.

 

[Uncle C]

ours rose by 35% in the last five years when, according to the Mail and other sensationalist publications, house prices around the country were plummeting.

Well the national average over the last 5 years (Oct 2005 to Oct 2010) fell 6% so you have made a sensational gain.

What was the address so we can all marvel at the Land Registry data?
Or is this yet another 'hideous piece of journalism that plucks figures'?

 

[Eastleigh Seagull]

Well the national average over the last 5 years (Oct 2005 to Oct 2010) fell 6% so you have made a sensational gain.

What was the address so we can all marvel at the Land Registry data?
Or is this yet another 'hideous piece of journalism that plucks figures'?

Thats pretty accusatory isnt it? Happy to send you a PM with the address as dont like to advertise too much on a public forum - but feel free to apologise in public

 

[hans kraay fan club]

Well the national average over the last 5 years (Oct 2005 to Oct 2010) fell 6% so you have made a sensational gain.

What was the address so we can all marvel at the Land Registry data?
Or is this yet another 'hideous piece of journalism that plucks figures'?

I live in the same area as Eastleigh. We bought our current house 7 years ago for a little over £200k. The identical one a few doors away just sold for £280k.

I don't doubt his figures at all.

 

[Bold Seagull]

Here we go, it's show time. The proper house price crash is under way.

We have just passed the denial and bull trap phases where recent buyers have been suckered into the market by a mismatch between supply and demand.

The "return to normal" was never going to last, so get ready for the real action.

So, 14 months on from your original post, where are we now exactly?

 

[jenny15]

house depends on many factors major effect of price are political flow and security of country. There are also other factors like Population and inflation rate.

 

[looney]

http://www.moneyweek.com/investments/property/uk/bad-news-for-uk-house-prices-insiders-are-selling-14001

 

[cjd]

Lets revisit this in 12 months shall we.

Just to remind you after all the utter crap you posted on this thread....you knew nothing then and you probably know nothing now. Full of shit.

 

[cjd]

Just to remind you after all the utter crap you posted on this thread....you knew nothing then and you probably know nothing now. Full of shit.

Bounce.

 

[The Modfather]

Still no sign of that 'crash' that some were predicting

 

[Noldi]

It's down to the lenders long time ago you could only borrow 1.5 time main earners salary and 1 time the second. So if you earned 20k and mrs 12k the most you could borrow was 42k. What is it now 5 times joint or something similar then you can borrow what about 150k

Noldi

 

[nicko31]

Still no sign of that 'crash' that some were predicting

FTSE 100 P/E 11 (pre-tech crash 30), UK residential property around 25. Where would you put your money?

Not expecting a crash, but I can't see where any growth is going to come from...

 

[The Antikythera Mechanism]

What happened to the crash?

 

[cjd]

Just to remind you ( Uncle C ) after all the utter crap you posted on this thread....you knew nothing then and you probably know nothing now. Full of shit.

4 years on and Uncle C is still full of shit and knows nothing. He really ought to be a Moderator.

 

[El Presidente]

4 years on and Uncle C is still full of shit and knows nothing. He really ought to be a Moderator.

Say it how you see it xx

 

[Uncle Spielberg]

The OP did the original post when the market was at rock bottom. Since then there has been a 20% upturn at least. So anyone not buying in 2010 at £ 200k who felt this has lost out on £ 40k. I do think however prices down here have peaked for a while and will be stable or even fall slightly the second half of the year but by only 2% or so.